Brazil's Record Soybean Harvest in Mato Grosso do Sul Faces Margin Squeeze Amid Soaring Costs and Falling Prices

The Bottom Line

• Mato Grosso do Sul is set for a record 17.7 million-ton soybean harvest in 2025/2026, marking its largest volume ever with a 19.2% increase in productivity.
• Despite the bumper crop, farmers face severe margin compression driven by a 65.2% surge in fertilizer costs (NPK 04-30-10) and a 37.3% decline in soybean prices from their May 2022 peak.
• Elevated interest rates, restricted rural credit, and climate uncertainties further exacerbate profitability challenges for agricultural producers in the region.

Analysis from Aprosoja-MS (Association of Soybean Producers of Mato Grosso do Sul) highlights that high productivity alone is no longer sufficient to guarantee profitability. Raphael Gimenes, an economic analyst at Aprosoja-MS, noted that "even with good productivity, many producers are achieving lower financial margins due to the simultaneous increase in production costs and agricultural price volatility. Profitability in the field does not depend solely on the quantity produced, but on the relationship between revenue, costs, and commercial efficiency." Geopolitical factors and international market fluctuations have driven up both commodity prices and input costs in recent months. While soybean and corn prices have seen a partial recovery, the advance in operational costs continues to erode net agricultural income.

The cost pressures are substantial. Data from Conab (National Supply Company) indicates that NPK 04-30-10 fertilizer, a key input in MS, surged 65.2% from R$3,355 to R$5,544 per ton between March 2025 and March 2026. Other inputs also saw increases, with dolomitic limestone rising 9.9% and agricultural gypsum advancing 11.4%. These escalating expenses, combined with high fuel costs and elevated interest rates, significantly reduce the net return on agricultural activity.

Simultaneously, producers in Mato Grosso do Sul are contending with a substantial decline in soybean remuneration. Granos Corretora data reveals that the price of a 60-kilogram bag of soybeans plummeted 37.3% from its peak of R$178.50 in May 2022 to R$111.88 in May 2025. Although there was a slight recovery to R$123.75 in 2024, prices have since retreated in 2025 and 2026, further squeezing margins. This dynamic—where production costs remain high due to fertilizers, fuel, and elevated interest rates, while producer revenue diminishes from commodity devaluation—explains the tightening financial landscape.

Linneu Borges, another economic analyst at Aprosoja-MS, advises caution for producers given international uncertainties. "The moment calls for great caution. Global conditions are volatile, and any change generates an effect for the producer, and as these are variables external to their control, they become hostage to foreign decisions," Borges stated. He further emphasized the need for robust financial planning, citing the high prices of fertilizers and crude oil, coupled with unfavorable rural credit conditions, as critical factors necessitating a well-structured future plan for producers. While soybean costs have seen a more moderate increase of approximately 2% between the last two harvests, corn has also presented similar challenges.